WASHINGTON,
D.C. —
The Consumer Financial Protection Bureau today took action against Mastercard
and UniRush for breakdowns that left tens of thousands of economically vulnerable
RushCard users unable to access their own money to pay for basic necessities.
In October 2015, a rash of preventable failures by Mastercard and UniRush meant
that many customers could not use their RushCard to get their paychecks and
other direct deposits, take out cash, make purchases, pay bills, or get
accurate balance information. UniRush then failed to provide customer service
to many consumers who reached out for help during the service breakdown. The
CFPB has ordered Mastercard and UniRush to pay an estimated $10 million in
restitution to tens of thousands of harmed customers. The CFPB also fined
Mastercard and UniRush $3 million.

“Mastercard and
UniRush’s failures cut off tens of thousands of vulnerable consumers from their
own money, and threw some into a personal financial crisis,” said CFPB Director
Richard Cordray. “The companies must set things right for consumers and make
sure such devastating service disruptions are not repeated.”

UniRush LLC is a
Delaware corporation headquartered near Cincinnati, Ohio. It is the program
manager for RushCard, a reloadable prepaid debit card co-founded by
entrepreneur Russell Simmons, and oversees operations such as the cardholder
website. Mastercard International Inc. is a global financial services business
incorporated in Delaware and headquartered in Purchase, N.Y. One of its units,
Mastercard Payment Transaction Services, is the current payment processor for
the RushCard.

RushCard is
advertised as a way for consumers to get direct deposits on their card “up to
two days sooner.” These deposits include government benefits or payroll funds.
In 2014, UniRush picked Mastercard as its new payment processor. Mastercard and
UniRush spent 13 months preparing to switch to Mastercard’s processing
platform, which ultimately took place Oct. 10-12, 2015. At the time of the
switch, RushCard had about 650,000 active users, of which about 270,000
received direct deposits on their RushCard.

Mastercard and
UniRush’s actions before, during, and after the changeover harmed tens of
thousands of consumers. The CFPB received about 830 consumer complaints from
RushCard users in the weeks that followed the switch in payment processors. By
comparison, the CFPB received 147 complaints about prepaid cards from November
2014 to January 2015. As a result of its preventable failures, the CFPB found
that Mastercard or UniRush:

Denied consumers access to their own money: UniRush did not
accurately transfer all accounts to Mastercard. As a result, thousands of
consumers could not access funds stored on their cards for days, or in some
circumstances, weeks. Because of Mastercard’s actions, accounts of about 1,110
consumers were incorrectly suspended. UniRush also delayed crediting cash
deposits to consumers’ accounts and shut off access to certain funds that
consumers put aside for savings. UniRush did not issue a working replacement
card to consumers whose cards were lost or stolen during this period.

Botched
the processing of deposits and payments: UniRush delayed processing direct deposits for more
than 45,000 consumers, and did not process or improperly returned deposits
of 2,000 others. As a result, consumers could not access their paychecks
or government benefits. UniRush also erroneously double posted deposits
and did not promptly process electronic debit transactions, which falsely
inflated those RushCard holders’ account balances. As a result, thousands
of consumers accidentally spent more money than was loaded on their
RushCard. With no advance notice to consumers, UniRush used funds
consumers subsequently loaded onto their RushCards to offset negative
balances caused by its processing errors.

Gave
consumers inaccurate account information: Mastercard did not make sure it was sending accurate
information about consumers’ account balances to UniRush when it declined
to authorize certain transactions. As a result, some consumers received
incorrect information telling them their account balances were zero, when
the consumers actually had funds stored on their cards.

Failed
to provide customer service to consumers impacted by the breakdowns: UniRush did not have an adequate plan to step up its
customer service response to meet the increased demand caused by service
disruptions. Even after hiring additional personnel, UniRush failed to
train customer service agents in time to meet the surge in demand. As a
result, some consumers who called customer service waited on hold for
hours and could not obtain critical information about the status of their
funds and accounts.

Enforcement Action

Under the
Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is
authorized to take action against institutions engaged in unfair, deceptive, or
abusive acts or practices, or that otherwise violate federal consumer financial
laws. The lack of preparation and testing by Mastercard and UniRush, as well as
multiple preventable failures, adversely impacted consumers, including by
denying them access to their own money. Under the terms of the consent orders,
Mastercard and UniRush must:

Pay an estimated $10 million in restitution to tens of
thousands of harmed consumers: Mastercard and UniRush must pay an
estimated $10 million in restitution to tens of thousands of customers who
could not access their funds or who suffered other problems created or worsened
by the failures and subsequent actions. Under the terms of the Bureau’s order,
the amount each consumer will receive depends on the particular failure the
consumer experienced. UniRush will send funds to affected consumers.

Draw up a plan to prevent future problems: Mastercard and
UniRush must devise a plan to prevent future service disruptions. The CFPB will
monitor the companies for compliance as they implement the plan.

Pay a $3 million civil penalty: Mastercard and
UniRush must pay a civil money penalty of $3 million to the CFPB Civil Penalty
Fund.

The
Consumer Financial Protection Bureau is a 21st century agency that helps
consumer finance markets work by making rules more effective, by consistently
and fairly enforcing those rules, and by empowering consumers to take more control
over their economic lives. For more information, visit consumerfinance.gov.